Using extracellular recording techniques in urethane- (1g/kg, i.p.) anaesthetized rats, we investigated the influence exercised by medial septal cholinergic neurons on dorsal hippocampus field CA1 neural responses to a hind paw injection of formalin (5%, 0.05 ml, s.c.). Cholinergic neurons of the medial septal region were destroyed by local microinjection of the immunotoxin 192 IgG-saporin. Compared to control vehicle microinjected animals, immunotoxin-treatment attenuated the amplitude, but not frequency, of CA1 theta induced by intraseptal injection of carbachol. This suggested a selective destruction of medial septal cholinergic neurons by the immunotoxin. Such destruction also abolished; (i) intraseptal carbachol-induced suppression of CA1 population spike, and (ii) stimulation-intensity dependent increase in amplitude, but not frequency, of theta evoked on electrical stimulation in the region of oral part of pontine reticular nucleus. Further, in comparison to vehicle-treated animals, selective cholinergic destruction attenuated formalin-induced; (i) theta activation, (ii) suppression of CA1 pyramidal cell population spike and dendritic field excitatory post-synaptic potential, (iii) inhibition of complex spike cell extracellular activity, and (iv) excitation and theta-rhythmicity of local putative GABAergic interneurons. However, pretreatment with the immunotoxin did not alter the strength and proportion of complex spike cells excited following injection of formalin. From these findings we suggest that medial septal cholinergic neurons mediate, at least partly, the amplitude of theta and pyramidal cell suppression via an inhibitory network involving CA1 interneurons. The data also indicates that during formalin theta, the cholinergic-mediated inhibitory processing does not modulate the strength and selectivity of complex spike cell excitation. This points to formalin-induced, non-overlapping inhibitory and excitatory processes that might have different functional relevance.